Should I report payments on my tax return that are from a lawsuit by my college?

by Christopher C. Humes, CPA | Feb 21, 2018

I have been paying off a lawsuit from my college which is collecting the unpaid balance on my school account. I have been paying $300 per month in 2017. Am I supposed to file something for taxes? Will I get a return back?

Based on the information provided, it appears that you had an unpaid balance on your student account at your college, and have been paying $300 monthly to satisfy the unpaid balance. If I follow your question, you would have received an annual tuition statement Form 1098-T from the college each year you were in college that could be used to report qualified education expenses and potentially receive a credit on your individual tax return. If you were a dependent on your parent’s tax return during the time you were in college, they may have taken the credit.
The repayment of the unpaid balance would not be a current deduction or postsecondary education expense on your 2017 individual income tax return. It would not be otherwise reportable anywhere on your 2017 individual return.

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Answered by: Christopher C. Humes, CPA, is with Baker Tilly Virchow Krause LLP in Wormleysburg, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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